China property developer Longfor maintains profit levels in the first half of the year, defying sector downturn

Beijing-based developer Longfor Group Holdings reported 6.59 billion yuan (US$907 million) in core profits in the first half of the year, a marginal improvement from a year ago and bucking the gloomy state of the property market in the world’s second-largest economy, as earnings were boosted by strong property management and services income which also saw margin improvement.

Longfor, which has total borrowings of 207.09 billion yuan and paying an average annual interest rate of 4.26 per cent, said revenue was down by 35 per cent to 98.8 billion yuan, largely dragged by a 40 per cent decline in property development. However, two segments contributed positively with investment property rising by 8 per cent to 5.86 billion yuan and property management and others, increasing by 13 per cent to 5.175 billion yuan, the company said.

“Our operation business achieved rental income of more than 6 billion yuan in the first half of the year, and continued to improve quality and efficiency,” said Chen Xuping, Longfor chairman.

“Based on the firm investment in the past, Longfor has successfully bulit a rich portfolio of commercial property projects in higher-tier cities, and strategically expanded our grid layout in these cities through a balanced approach of asset-heavy and asset-light models. Our commercial division has started generating positive cash flow in the first half of the year. Rental housing business continues to improve operational efficiency and maintain healthy profit growth,” he added.

“We introduced the debt-cutting management strategy three years ago, and are consistently reducing our overall debt size while continuously optimizing the debt structure at the current stage,” it said in a post-earnings announcement.